Hugo Chavez Dies: Good for Commodities?

The flamboyant and egotistical leader of Venezuela - Huge Chavez - died Tuesday after a two-year battle against cancer. The question now is will there be a more business-favorable replacement of Chavez, or will Venezuela remain a backward, socialist country barely able to make it.

Chavez bought the love of the poor in the country by nationalizing industries and then feeding some of the poor while offering them free health clinics in the poorest parts of the country.

Those that he bought using the goods and capital of others will miss him, but the cost of nationalizing energy especially, as always, results in a loss of production.

Opponents of the mini-dictator will be glad he is out of the way as he has largely wasted the natural resources that would have, and should have, been put to better use. Unfortunately, socialists can't see the devastating effects of wealth distribution, and over time always end up being a destructive force.

Assuming Vice President Nicolas Maduro steps into his shoes (or whoever does), it'll be interesting to see if policies in the country towards commodities continues on. Since there are always large numbers of poor under wealth redistribution schemes, it's going to be hard for whoever follows Chavez - even if they were more favorable to capitalism - to change things without social unrest that comes from government dependence.

Maduro does appear to have a strong lead over his competitors to replace Chavez, but it's not clear if he has the charisma and strength to follow in the footsteps of goal of Chavez. He has said he wants to continue on in that vein, but rhetoric is different from reality, and pressure will rise from a variety of places to get what they want.

It was the somewhat benign but bombastic personality of Chavez that allowed him to get away with what he said, which was really more theater than a true threat. Madura doesn't have that same personality, so it could be much harder for him to command the attention and faithful and adoring followers Chavez did.

As for commodities in the country, it's unlikely some major change will happen in the near term, but there is always a point in socialism, as history has proven over and over again, when it can no longer sustain itself.

Many in Venezuela see that, and they are the ones hopefully that will influence the country going forward; no matter who ends up leading it.

Interestingly, the more desirable and probable opponent of Maduro, Capriles, would probably have beaten Maduro under any other circumstance, but he is likely to ride the emotion people have attached to Chavez and now passed on to him when Chavez picked him as his preferred successor in December 2012.

Maduro has positioned himself as a Chavez clone, but it's almost assuredly so he would be in the position he is in at this moment. More than likely we'll find out if he is really a Chavez or a pretender seeking power. Hopefully it's the latter.

Is Spain About to Pull Europe Down with it?

To listen to the mainstream media, you would think Europe is about to enter some type of economic golden age, even though the situation in Spain is worsening, as the country reported its latest quarter saw the economy contracting more than it was estimated to.

As goes Spain so will go the EU, and so the idea that Spain's economic health getting worse doesn't count much to the clueless reporters, only shows how much of the koolaide they're drinking in an attempt to cover up the disaster of keynesianism, stimulus, debt, fascism and socialism.

All of these have converged and blended to create the economic disaster we're seeing around the world, one that is not even close to being solved, let alone recovering, as most in the media are asserting and reporting.

It's important to note that the irrelevant idea of market sentiment and the reality of how an economy is actually performing are two completely different things, with sentiment having no importance at all, other than to write headlines that are done to make people and politicians good about the disaster that is the global economy.

Spain's GDP dropped 0.7 percent from the third to the fourth quarter, plummeting the most in a year.

The only thing saving Spain and Prime Minister Mariano Rajoy from requesting another international bailout is a robust bond market to start the year. Investors have poured money into Spain to get the high yields offered by the country.

Unfortunately, that will do nothing to change the economy of Spain, which continues to contract, and is expected to for at least two more years, and probably more.

According to the Bank of Spain, the bond money isn't doing anything for what it identifies as "the real economy."

That's the correct assessment, as regardless of how strongly the bonds are selling, Spain's debt load continues to grow, making it the domino that could topple the region.

One bright spot in the entire mess is there are steps to cut back on taxes on entrepreneurs, which is one of the few smart moves coming out of the disaster. It should have been done long ago. But better late than never.

Other than that, there is little if any good economic news coming out of Spain, and there will be a time when it will request even more international loans, and when that happens the future of the country and the Euro zone will again put to the forefront where it belongs, as there is absolutely nothing going forward that suggests this will turn around any time soon.

It's amazing in light of this that the media continue to report Europe has turned the corner economically, when the key country of concern is getting contracting rather than growing. Only the investment in bonds keep the truth of this from going more public. That will probably end soon, and Spain will come back into the public eye where it belongs, so we can see a more accurate picture of what's really going on.

Any outlook or decision not including Spain as a major variable is one that is flawed and faulty.

Greece Tells Taxman to take Citizens' Money

Greece is apparently getting even more desperate than before, as now the government is trying to pass into law a draconian rule which allows them to steal money from the bank accounts of people they accuse of tax evasion, even if they haven't been proven guilty or convicted of the crime.

What if they are found to be innocent? Supposedly the tax authorities will return it to the falsely accused. Yeah. That'll work great.

How it'll work is tax authorities will be given access to the accounts of the accused and draw the money out of them that is alleged to be owed.

The question is of course where is that money going to be while they await the results of the trial? We all know it'll be long gone. Then the question must be asked of where the Greek government and its tax authorities going to get the money to pay back the people that are acquitted? Since they have no money, it's going to be pretty hard to return what is already spent.

You can easily see where this is all going to go. There will be an endless number of lawsuits filed against the people of Greece as a tool to extract even more money from them. Just enough of them will be legitimate enough to make it look like the actions are justified. But there can be no doubt, if this is put into effect, it will further enrage the population and there will be further unrest and violence.

That's not to say I'm in the corner of the people of Greece, as they allowed themselves to live in a way for a long time that was unsustainable, extracting ridiculous concessions and perks which the small percentage of the productive in the country, Europe, and other parts of the world, got tired of underwriting.

So while the theft of money from people that are not convicted of a crime by the government of Greece is despicable, so is the socialist practices of a country that has been hit right in the face by the fact that socialism hasn't and will never work.

They're also learning the hard way that Keynesianism is dead, and no matter how much money is thrown at a problem, if it isn't able to be paid back by a productive and vibrant free market, it's going to pile up to the point there is no hope of paying it back, no matter how much they whine and cry about the cruelty of austerity. All that's happening is they are learning they actually have to work for their money and compete against others in a global marketplace.

Opposition leader Alexis Tsipras has even called for the equivalent of a Marshall Plan to bail out the country.

The unions continue to implement strike after strike as if that is going to change the circumstances. What is it about there being no money they don't understand? What is it about no one wants to pay for their plush lifestyle any longer? Those days are over and will never come back. One way or the other they will have to deal with it. So will the rest of the world, including America.